When a bank shuts down, it raises serious questions about the safety of your money, the future of your assets, and the process to reclaim what’s yours. Whether you have funds in dormant accounts or valuables in a safe deposit box, understanding how these assets are handled can bring peace of mind. This article explores what happens to unclaimed money and assets during bank failures and how they may become unclaimed property held by the state.
The Role of the FDIC When Banks Fail
When a bank fails, the Federal Deposit Insurance Corporation (FDIC) steps in to protect depositors. Here’s what happens:
- Account Transfers or Refunds: The FDIC arranges for deposits up to $250,000 per account holder to be transferred to another bank or refunded directly to customers.
- Unclaimed Accounts: Accounts not immediately claimed by customers are flagged as dormant or inactive, which can lead to them being classified as unclaimed property.
- Safe Deposit Boxes: Items stored in safe deposit boxes remain the property of the customer but may be turned over to the state if left unclaimed.
How Unclaimed Property is Defined
Unclaimed property refers to financial assets or valuables that remain inactive or unclaimed for a certain period, known as the dormancy period. Common examples include:
- Savings and checking accounts
- Uncashed payroll or cashier’s checks
- Insurance policy payouts
- Stocks, bonds, or dividends
- Contents of safe deposit boxes
When these assets remain unclaimed, they are typically transferred to the state’s unclaimed property office for safekeeping.
When Does Money From Failed Banks Go to the State?
Dormant or Inactive Accounts
If a bank fails, dormant accounts may already be flagged for state transfer. Funds from these accounts are sent to the state after the dormancy period has elapsed, which varies by state but is typically 3-5 years.
Unclaimed Safe Deposit Boxes
Contents of safe deposit boxes not retrieved after a bank failure are inventoried and stored. If left unclaimed for a certain period, these items are handed over to the state, where they may be auctioned. However, the proceeds remain claimable by the rightful owner.
Unclaimed FDIC-Insured Deposits
The FDIC holds unclaimed insured deposits temporarily. If they remain unclaimed after a specific period, these funds are transferred to the state as unclaimed property.
How to Check If You Have Unclaimed Assets
1. State Unclaimed Property Databases
Each state maintains a searchable database of unclaimed property. Resources like MissingMoney.com consolidate data from multiple states, making it easier to locate assets.
2. FDIC’s Unclaimed Funds Search
If your funds were insured by the FDIC during a bank failure, you can search their database to check for unclaimed deposits.
3. Contact Your State Treasurer
Reach out to your state’s unclaimed property office for assistance in locating lost or unclaimed property.
Protecting Your Assets During a Bank Failure
Keep Accounts Active
Perform regular transactions, such as deposits or withdrawals, to ensure your accounts are not flagged as dormant.
Update Contact Information
Ensure your bank has up-to-date contact details, so you receive any notifications about account activity or bank transitions.
Respond to Notifications
If your bank is closing, act quickly to transfer or withdraw your funds.
Monitor Dormancy Periods
Be aware of the dormancy periods for your state and asset type to avoid unintentional abandonment of property.
Why States Hold Unclaimed Property
The transfer of unclaimed property to the state ensures:
- Consumer Protection: Safeguarding funds and assets from fraud or misuse.
- Centralized Access: Providing a single point of contact for claiming unclaimed property.
- Indefinite Availability: States hold unclaimed property indefinitely, meaning you or your heirs can claim it at any time.
Download the “Forgotten Loot Guide”
Navigating unclaimed property laws and databases can be overwhelming. Our free “Forgotten Loot Guide” provides:
- A step-by-step process for searching unclaimed property databases
- Links to all 50 state unclaimed property offices
- Tips to protect your assets and avoid losing track of them
Download the Forgotten Loot Guide to start your search today.
Disclaimer
The information in this article is for educational purposes only and should not be considered legal or financial advice. For specific questions about your assets, consult the FDIC or your state’s unclaimed property office.
Understanding what happens to your money and assets during a bank failure is crucial to safeguarding your finances. By staying proactive and informed, you can ensure that your property remains secure and accessible, even in the face of unexpected challenges.